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Bankrupt owner collects rent but does not pay the HOA

Posted on Mon, Jul 19, 2010 @ 06:25 AM
hoa feesOne of the owners in our building stopped making payments of HOA fees 18 months ago; about 12 months ago, he rented their unit; and about six months ago he declared bankruptcy. Despite his bankruptcy, the renters pay him, but no fees are paid to us: the HOA pays for their water, security access, elevator access, and garage. Our lawyer says we have no rights until bankruptcy is settled. Is that truly the case?

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In my state of Michigan, you, the association, can demand that the renters pay the assosciation fee directly to the association by-passing the owner. This is not inconflict with the rental agreement between the owner & renter. I have found that many so called professionals, whether lawyers or management comp. are uninformed. You must check out your own state condo laws.

posted @ Monday, July 19, 2010 7:57 AM by Donna Alfieri

I do not know the laws of each state with that said the only recourse is if the HOA put a lean on his property.  
The bank does allow owners to stay in the condo and take care of the property. I have heard of bankrupt owners renting out their condos while in Bankruptcy. You can call the bank and tell them he is renting the condo. This could get him in trouble depending on the the state laws.  
The HOA is still not going to get the money until bankruptcy is over. 

posted @ Monday, July 19, 2010 8:02 AM by Victor

You had options for 18 months and nothing was done! The lawyer is correct if the HOA was named a creditor on the BK you have no rights to back dues! He will have to resume paying them again when his BK is over and let it be a lesson for the future don't let homeowners get that far behind before you take action.

posted @ Monday, July 19, 2010 8:38 AM by amanda

In Florida the SB1196 that came into law will help you to resolve this issue 

posted @ Monday, July 19, 2010 9:37 AM by Jose E. Humaran

Amanda and others -- A couple of points of clarifications. The Board did act immediately upon delinquency: we did get a lien against the property, but there is a waiting period and the owner filed bankruptcy a few days before that period was up. We live in California and have followed the letter of the law. We have not, however, contacted the bank, so thank you for that idea.

posted @ Monday, July 19, 2010 11:42 AM by TS

our HOA does not do liens they do forcible entry and detainers.. homeowner does not pay they lose the rt to occupy and the judge grants possession to HOA. We are in IL I am sure CA has different laws I would ask an attorney about the FED because it entitles you to 6 months back dues no matter what in IL.. May be helpful for the future?

posted @ Monday, July 19, 2010 1:03 PM by amanda

What are the rules for Nevada on this point?

posted @ Monday, July 19, 2010 10:22 PM by Cary

I live in a 17 units condo that some of the units are detached or stand alone unit in Charleston,SC. Now we have 7 units that did not pay. 1 unit owned by attorney that stop paying over 2-3 years and every time we take her to court, she ask for a jury try and complaint that the regime did not take care her yard well and etc..She knew that the regime does not have money to pay for the attorney due to lack of fund. 1 unit is in shortsale over a year and stop pay the regime and the owner is collecting the rent,we still have to provide the water&sewer and cut grass and pay their hazard insurance and flood insurance. We have a lien on this one but can't collect anything. We notified thier mortgage about thier delinquent on the regime but get no responsed from their bank. Another owner owned 2 units. He put one in his wife name and one in his name and did not paid on any for over a year too. Right now we have lien on those units but can't collect any of them some owe more than the small claim court limit. The board can't do anything because we can't seem to get anyone come to the meeting and no one want to be on the board. Like now we live on credit line that set up with the bank. Last month we barely have enough money to pay for the insurance. PM has to hold of paying water bill to get enough money to pay for the insurance. I was drag into the board because they can't find 5 people to fill the board. The president is the one who make all the decision, most of the time without the rest of the board. We have one annual meeting and only 3 people showed up. The one that pay regime fee did not want the rate to go up to cover the one that did not pay. It's a matter of time that we might be bankrupt. So what will happen? I plan to buy my own insurance and tap in the water & sewer line and have my owned miter and cut my own grass if it's happened. However I rather prevent it if we have other solution. Any suggestion? The PM we have right now does not communicte with owner. No monthly statement or bill. She just send a one time card to let you know how much is the regime and where to send it to.

posted @ Thursday, July 07, 2011 11:55 AM by dee

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